BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SCA 7 Hearing Date: 1/12/2016
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|Author: |Huff |
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|Version: |5/28/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Randy Chinn |
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SUBJECT: Motor vehicle fees and taxes: restriction on
expenditures
DIGEST: This constitutional amendment (SCA) proposes to amend
the California Constitution to:
1)Prohibit the Legislature from borrowing revenues from fees and
taxes imposed on vehicles or their use or operation, and from
using those revenues other than as specifically permitted in
the Constitution, with limited exceptions.
2)Prohibit revenues derived from motor vehicle taxes, motor
vehicle fees and taxes, and vehicle license fees (VLFs) from
paying the principal and interest on bonds or other
indebtedness, except as explicitly provided.
3)Require that revenues derived from the portion of the VLF that
exceeds the current rate of 0.65% be used solely for street
and highway purposes.
ANALYSIS:
Existing law:
The California Constitution:
1)Restricts the use of fuel excise tax revenues (from vehicles
used on public streets and highways) and vehicle registration
fee revenues to transportation purposes.
SCA 7 (Huff) Page 2 of ?
2)Restricts the Legislature from borrowing revenues from the
Highway Users Tax Account.
3)Restricts fuel excise tax revenues to development and
construction of roads and highways, unless a majority of
voters in an election throughout a county or counties approves
the use of the revenues for fixed-guideway mass transit.
4)Allows the Legislature to pledge fuel excise tax revenues for
payment of bonds to fund voter-approved fixed-guideway mass
transit projects.
5)Allows the Legislature to use up to 25% of the state's share
of fuel excise tax revenues for payment of state-issued,
voter-approved bonds for transportation purposes issued after
November 2010.
6)Allows a city or county to use up to 25% of its share of fuel
excise tax revenues for payment of locally issued,
voter-approved bonds for transportation purposes.
7)Specifies that the restrictions on fuel excise tax and vehicle
registration fee revenues do not apply to revenues derived
from sales taxes or VLFs.
This SCA:
1)Restricts the Legislature from borrowing revenues from any of
the following taxes:
a) Fuel excise taxes (from both on and off public roads and
highways)
b) Vehicle fees and taxes (such as vehicle registration
fees and weight fees)
c) VLFs above the existing rate of 0.65% of the market
value of the vehicle
1)Eliminates the authority of the Legislature or local
governments to pledge fuel excise tax revenues for payment of
bonds to fund road construction and repair as well as
voter-approved fixed-guideway mass transit projects.
2)Restricts the use of revenues from any fuel excise tax,
vehicle fee or tax, or VLF above the existing rate for the
SCA 7 (Huff) Page 3 of ?
payment of bond indebtedness, except as provided in existing
law.
3)Dedicates any revenues from increases in the VLF above the
existing rate to transportation purposes.
COMMENTS:
1)Purpose. According to the author, since 2010, the Legislature
has diverted over $5 billion from the State Highway Account to
the General Fund to pay debt service on General Obligation
Bonds. Additionally, since 2012, $100 million per year in gas
taxes has been deposited into the General Fund rather than
being used for transportation purposes. This SCA asks the
voters to protect transportation taxes by requiring that they
be used only for transportation purposes and preventing those
revenues from paying for transportation bonds.
2)Background of transportation maintenance backlog. California
faces an enormous road and highway maintenance backlog. The
Governor, in his 2015 inaugural address, noted that the state
faces a $59 billion shortfall over the next 10 years to
adequately maintain the existing state highway system. Local
governments have estimated the funding shortfall for
maintaining existing local streets, highways and bridges is
$78 billion over the same time period. Efforts to develop
solutions have been ongoing, including the establishment of
the current First Extraordinary session.
3)Current restrictions. Most transportation revenues, including
gasoline and diesel excise taxes and vehicle registration
fees, are constitutionally protected from being borrowed or
used for purposes other than transportation. This protection
does not apply to VLFs and fuel excise taxes for usage outside
of public roads.
4)General Fund impact: weight fees. Weight fees are assessed on
commercial vehicles based on weight. Those revenues are
protected by the Constitution and are currently used to pay
the principal and interest on transportation bonds, resulting
in a savings to the General Fund of $1 billion annually. The
author disagrees with that practice, believing that those
transportation bonds should be paid out of the General Fund,
with the weight fees funding other new and ongoing
transportation projects. This SCA prohibits the practice of
SCA 7 (Huff) Page 4 of ?
paying for the transportation bonds with weight fee revenue,
resulting in the loss of the General Fund savings.
5)Additional restrictions: vehicle license fee. This SCA
proposes a comprehensive set of protections against borrowing
taxes and fees raised from fuel excise taxes, vehicle fees and
taxes, and VLFs above the existing rate of 0.65%. It also
proposes to dedicate any revenues from increases in the VLF
above the existing rate, and any fuel excise taxes on fuel not
used on public roads and highways, to transportation purposes.
The VLF is a property tax and therefore not subject to the
same constitutional restrictions as taxes on motor vehicle
fuels or the use of motor vehicles. Most VLF revenues are
used for local government purposes. The proposals being
discussed in the First Extraordinary Session do not include a
VLF increase.
6)Non-public road uses: author's amendment. Motor vehicle fuel
is sometimes used by vehicles that do not use public roads,
such as boats, airplanes, and off-road vehicles. Taxes from
the use of these fuels are used to support the infrastructure
and purposes those vehicles are put to, such as harbors,
airports and off-highway vehicle parks. The author will
propose amendments to clarify that the SCA does not change the
current use of these funds.
7)Double-referral. If approved, this bill has also been
referred to the Senate Elections and Constitutional Amendments
Committee.
Related Legislation:
SCAX1 1 (Huff) -This SCA is nearly identical to SCA 7 and was
approved unanimously by the Senate Transportation and
Infrastructure Development Committee, though with caveats by a
number of Senators. This SCA is pending in the Appropriations
Committee.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
January 6, 2016.)
SCA 7 (Huff) Page 5 of ?
SUPPORT:
Alameda Corridor - East Construction Authority
California Association of Harbor Masters and Port Captains
California Yacht Brokers Association
County of Riverside
Howard Jarvis Taxpayers Association
Kern County Board of Supervisors
Madera County Board of Supervisors
Marina Recreation Association
National Marine Manufacturers Association
Orange County Taxpayers Association
San Bernardino County
San Joaquin Valley Regional Transportation Agencies
Transportation Agency for Monterey County
Worldwide Boaters Safety Group
OPPOSITION:
None received
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